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Today’s organizations seem to have an insatiable appetite for bandwidth. Despite the downturn in the economy, e-business is still a reality and continues to put more pressure on networks. That’s tough on IT managers, who now have to find ways to do more with less.

The good new is that the cost of bandwidth is declining rapidly, partly due to technology advances and partly due to the fact the telecom service providers are under a lot of market pressure. That will help CIOs and telecom managers cope with the situation. Other things that may help are outsourcing and the convergence of voice and data.

What kind of demands are managers going to have to meet. Let’s look at some numbers. Bob Hafner, vice-president and networking group research director for Gartner Group Inc. in Toronto, predicts that enterprise wide-area network traffic will increase at least threefold over the next five years. Local-area network traffic will increase tenfold by 2006. Yet network spending will grow only 10 per cent to 20 per cent per year in most large enterprises, and staffing less than five per cent per year.

The Outsourcing Option

One is reliance on technology that is two or three generations old, or an inability to take advantage of new technology because of a lack of skills or resources.

Another is a geographically distributed organization. And if telecom infrastructure is critical to the business, he adds, a reliable outsourcer that can provide service level agreements may be the best guarantee it will keep running.

Internal Job Changes

As outsourcing becomes more widespread, the nature of the telecom manager’s or network professional’s job inside the business will change. “We’re moving away from doing the work in an organization to managing the work. You need a different type of professional who looks at higher-level aspects,” Hafner says.

The nature of network and telecom managers’ jobs will also be changed by convergence. Voice and data, historically transmitted over different networks, are gradually coming together in a single network. It isn’t moving as fast as some expected, or in many cases for the reasons predicted, but it will happen over time. “We’re very confident that this is the technology of the future,” Hafner says. “It’s just that the future is not going to happen as quickly as the equipment vendors would like.”

The big problem to date is that vendors have been promoting convergence as an end in itself, says Tom Nolle, president of consulting firm CIMI Corp. in Voorhees, N.J. “We’ve tried to make it a driver, rather than a consequence of change,” Nolle says. “I think that we can assume that convergence would arise not as a proactive driver of network change but as a consequence of general change in networks.”

That means wise purchasers won’t buy into Voice over Internet Protocol (VoIP) because they think convergence is the next big thing, but because VoIP can deliver tangible benefits to their organizations. And so it sometimes can, according to a study conducted by the Telecom Applications Research Alliance (TARA) and the Halifax office of DMR Consulting Group Inc.

Economics of VoIP

The study – sponsored by Cisco Systems Canada Inc., which sells VoIP technology – concluded that moving from phone-company Centrex service or a private branch exchange (PBX) to VoIP can save organizations between 18 and 30 per cent of their telephony costs annually. In general, potential savings increase with the size of the organization and are greater for PBX than for Centrex users.

The economics of VoIP are starting to attract attention in the business community. One example is the Winnipeg Regional Health Authority, which runs nine hospitals around the Winnipeg area. “We’ve taken a preliminary look,” says Jim Kerr, regional director of IT. “We haven’t done an in-depth look at it.” Cost savings would be the main attraction, Kerr thinks, along with added flexibility and less internal infrastructure to support.

The TARA/DMR study makes some assumptions that would not apply for every organization. First, it presumes the organization has a solid IP network in place with enough capacity to handle the added load of VoIP, and that every employee who needs a telephone already has a computer – so that the network would not have to be extended to additional employees, says Terry Hallett, TARA’s director of research and technology. Second, the cost-benefit analysis presumes that the organization needs to replace its existing phone system or is starting from scratch. And that’s a big assumption. Ian Angus, president of Angus Telemanagement Group Inc. in Ajax, Ont., says VoIP looks good only if an organization begins with no phone system or if its PBX is obsolete – and he quickly adds, “the problem is, the PBX is almost certainly not obsolete.” PBXs last longer than computers, are depreciated over a longer time, and if one has been upgraded on a regular basis it becomes hard to justify replacing it.

“Right now we’re saying look at when it makes sense,” Hafner notes. “If you’re moving into a new facility, then perhaps an IP platform would be a good choice.”

It seemed like a good choice for ecwebworks, a Mississauga, Ont.-based company that provides Web-based business transaction services. One big reason was that ecwebworks was a start-up – launched in 1997 – without an existing PBX. Not only does the company use VoIP internally, but it also relies on the technology for communicating with customers around the world.

“We combined our technology strategy to be an all-in-one investment, so we went with a digital phone system as our first choice,” says Murray Johnston, senior vice-president for e-business at ecwebworks. “It was very, very economical. Also, we’re growing, and a single network means a single drop for data and voice, so it’s very easy to move around.” Johnston says adding voice and data connections for a new employee takes about five minutes, and it’s equally easy to move an employee from one place to another or switch extension numbers.

Evaluating IP Telephony

Even if the PBX is ready to be put out to pasture or a company is beginning life with no legacy equipment, though, it’s wise to look closely at the pros and cons of a VoIP system. “The best thing for you to do when evaluating VoIP is pretend like you don’t know that’s what it is,” Nolle says. In other words, compare the features and the cost, and resist being seduced by convergence hype and the idea that you’re buying a sexy new technology.

To be fair, IP telephony systems will do much better in this sort of hard-nosed comparison today than they might have a year or two ago. “The existing IP telephony platforms are now comparable to what the PBX platforms are capable of doing,” Hafner says. Until recently that was not true.

Yet there may still be some concerns. One of those concerns is whether the existing data network can support voice traffic as well. Nolle says a surprisingly large number of desktops are still relying on shared 10-megabit connections, which won’t handle voice comfortably. But if you’ve already upgraded your network to at least switched 10-megabit service, or are doing so anyway, voice is viable.

Another issue could be supporting the unfamiliar technology. There are mixed views about this. Nolle says PBXs need little or no maintenance as long as you don’t change applications much. “It appears as though (VoIP) products are taking more to support them by a significant margin than a standard voice platform,” he says, “and that appears to be especially true in businesses that have a static application set.”

For those whose voice needs are constantly changing, and especially for those with applications that link voice and data, VoIP may stack up better against traditional voice platforms. For a growing organization like ecwebworks, VoIP has advantages when it comes to support. Yet expertise is important. Johnston says his company has found its VoIP system easy to support – but he adds one big reason for this is that ecwebworks, by the very nature of its business, has no shortage of the kind of technical expertise needed to do so.

And TARA’s Terry Hallett maintains that while computer personnel will have to learn something about voice to support IP telephony, once they do so an organization will be able to consolidate separate voice and data support groups into one. “The computer systems people can look after both systems,” he says. “There has to be a bit of understanding in terms of the features and services that are available, and a bit in terms of quality of service, but it’s probably easier to train a computer technician on IP telephony than to take a telephone person and train him on computers.”

If convergence eventually lives up to expectations, though, the implications will be more profound than a bit of additional training for computer technicians. “Obviously if we’re looking at convergence we should be looking at converging our voice and data groups, which still tend to be relatively separate,” Hafner says. Besides training employees on unfamiliar technologies, that means changing organizational structures and learning to manage voice and data networks together rather than separately. That may go hand in hand with the trend to outsourcing, since outsourcing means a shift in emphasis from hands-on technical skills to understanding the broad capabilities of the technology and how they fit in with the business.

Most of the vendors who are pushing voice-data convergence hope that those customers who buy into the idea will purchase it all from them. But Hafner says that may not be a good idea. Even with voice and data running over a single network it won’t be necessary to rely on one vendor, he maintains – voice will just be another application on the network, and like any other application does not have to be bought from the supplier of the network itself. So companies would do well to keep their eggs out of a single voice-data basket by choosing separate suppliers.

Metropolitan Optical Networks

At least one other technological change will help telecom managers balance their budgets. Ethernet, which is well established as the dominant networking standard within organizations, is extending its reach into the wide area. Metropolitan optical networks can now support Ethernet traffic at speeds of a gigabit or more. This makes it possible to link multiple locations within an enterprise with what looks to the user like a single local network. Moving a user from one location to another becomes dramatically easier. And costs are reduced.

Alex Saunders, president and chief executive of Merrimack, N.H.-based metropolitan Ethernet technology vendor Metrobility Optical Systems, says routing Internet Protocol traffic over long-haul Frame Relay networks automatically adds overhead because IP packets must be placed inside Frame Relay packets. Metropolitan Ethernet eliminates that. It also makes it quicker and easier to hook up services, and very easy to re-allocate bandwidth to meet immediate needs, he says. And it is easier for in-house network staff to manage.

Nolle expresses some doubts, though. He says metro Ethernet will appeal to a fairly small number of organizations, not enough to make a viable market for service providers, and he questions whether there is much need for the added capacity since the bursting of the dot-com bubble.

Yet Saunders says the demand will be there as long as the price is right. And Hafner maintains the benefits are real.

Cities Choose Fibre

Starting in 1995, Brampton and Mississauga, two cities just west of Toronto, began using Ontario Hydro right of way to build a fibre-optic network that now extends over 210 kilometres. It links city offices, libraries, recreation centres and other facilities in the two cities and the neighbouring town of Caledon.

“It really allows us to remove the barriers for everybody that’s outside of City Hall,” says Chris Moore, chief information officer for the City of Brampton.

Owning their own fibre network gives the municipalities virtually unlimited bandwidth among locations. That has made life easier for Moore, who has consolidated servers from many offices to a few without compromising on response time for employees in the remote locations. That means fewer servers to support and less travelling from place to place in the process.

With capacity to spare, the cities’ next logical step is to consider moving voice traffic onto their fibre network. Brampton currently uses Centrex service provided by Bell Canada, Moore says, but within the next year will probably be looking at moving to VoIP to take advantage of available bandwidth on its fibre network.

While technology advances offer opportunities to provide more services for less money, it is the highly competitive telecom market that may be the greatest boon to organizations with limited telecom budgets. Facing an economic downturn that is constraining their revenues, suppliers will probably be more susceptible than usual to pressure from customers. Savvy CIOs and telecom managers will be on the lookout for opportunities to reap the benefits of this buyers’ market.

Grant Buckler is a freelance writer specializing in information technology and IT management. He is based in Kingston, Ontario.